Which of the following is true concerning interest rates on bonds?
A) The tax treatment of interest earned on municipals bonds makes the interest rate on them higher than otherwise.High default risk makes the interest rate on a bond higher than otherwise.
B) The tax treatment of interest earned on municipals bonds makes the interest rate on them higher than otherwise.High default risk makes the interest rate on a bond lower than otherwise.
C) The tax treatment of interest earned on municipals bonds makes the interest rate on them lower than otherwise.High default risk makes the interest rate on a bond higher than otherwise.
D) The tax treatment of interest earned on municipals bonds makes the interest rate on them lower than otherwise.High default risk makes the interest rate on a bond lower than otherwise.
Correct Answer:
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